he TimpRiders LP has operated
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Comprehensive Problem 20-81 (LO 20-1, LO 20-2, LO 20-3, LO 20-4, LO 20-5, LO 20-6)
(Algo)
[The following information applies to the questions displayed below.]
The TimpRiders LP has operated a motorcycle dealership for a number of years. Amir is the limited
partner, Francesca is the general partner, and they share capital and profits equally. Francesca works
full time managing the partnership. Both the partnership and the partners report on a calendar-year
basis. At the start of the current year, Amir and Francesca had bases of $12,200 and $5,200,
respectively, and the partnership did not have any liabilities. During the current year, the partnership
reported the following results from operations:
Net sales
Cost of goods sold
$ 713,000
532,000
199,000
Operating expenses
Short-term capital loss
Tax-exempt interest
§1231 gain
On the last day of the year, the partnership distributed $5,200 each to Amir and Francesca.
4,000
6,000
10,000
Comprehensive Problem 20-81 Part 1 (Algo)
a. Year-end basis
b. Loss limited by tax basis
c. Loss limited by passive activity
Required:
a. What outside basis do Amir and Francesca have in their partnership interests at the end of the year?
b. How much of their losses are currently not deductible by Amir and Francesca because of the tax-basis limitation?
c. To what extent does the passive activity loss limitation apply in restricting their deductible losses for the year?
Note: For all the requirements, negative amounts should be entered with a minus sign. Leave no answers blank.
Enter zero if applicable.
Amir
Francesca](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F721b300f-47bb-4ffb-8b1f-ffcfa3d7a0f3%2F23345851-6022-4885-bbe4-c5119c55beb4%2Fgtdlmz_processed.png&w=3840&q=75)
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Required information
Comprehensive Problem 20-81 (LO 20-1, LO 20-2, LO 20-3, LO 20-4, LO 20-5, LO 20-6)
(Algo)
[The following information applies to the questions displayed below.]
The TimpRiders LP has operated a motorcycle dealership for a number of years. Amir is the limited
partner, Francesca is the general partner, and they share capital and profits equally. Francesca works
full time managing the partnership. Both the partnership and the partners report on a calendar-year
basis. At the start of the current year, Amir and Francesca had bases of $12,200 and $5,200,
respectively, and the partnership did not have any liabilities. During the current year, the partnership
reported the following results from operations:
Net sales
Cost of goods sold
$ 713,000
532,000
199,000
Operating expenses
Short-term capital loss
Tax-exempt interest
§1231 gain
On the last day of the year, the partnership distributed $5,200 each to Amir and Francesca.
4,000
6,000
10,000
Comprehensive Problem 20-81 Part 1 (Algo)
a. Year-end basis
b. Loss limited by tax basis
c. Loss limited by passive activity
Required:
a. What outside basis do Amir and Francesca have in their partnership interests at the end of the year?
b. How much of their losses are currently not deductible by Amir and Francesca because of the tax-basis limitation?
c. To what extent does the passive activity loss limitation apply in restricting their deductible losses for the year?
Note: For all the requirements, negative amounts should be entered with a minus sign. Leave no answers blank.
Enter zero if applicable.
Amir
Francesca
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